Below is the condensed income statement for Jay Tools for the past year:

Product

T1

T2

Sales

$340,000

$160,000

Costs:

Variable costs

$270,000

$110,000

Fixed costs

80,000

20,000

Total costs

$350,000

$130,000

Income (loss)

$(10,000)

$ 30,000

Since product T1 is not giving profit, Jay is considering discontinuing product T1 at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product T2. What is the amount of change in net income for the current year that will result from the discontinuance of Product T1?

Select one:

a.

$70,000 increase.

b.

$50,000 increase.

c.

$50,000 decrease.

d.

$70,000 decrease.

e.

None of the above answers is correct.